Housing affordability takes a hit in Washington Co.; gets small increase in Sullivan

Home price increases and wages that are not increasing as fast dealt a blow to housing affordability as measured by Washington County’s Home Price Index during Q2 this year. At the same time, Sullivan County’s index improved, according to ATTOM Data Solution’s Home Affordability Report.

ATTOM’s Report calculates an affordability index based on a percentage of income needed to buy a median-priced home relative to historic averages. An index above 100 indicates the median home price is more affordable than the historic average. An index below 100 indicates median home prices are less affordable.

Sullivan County’s Q2 index was 102, an improvement for the previous index of 97. That’s based on an 8% increase in the median home price and a 1% annual growth in wages. The data behind the index also shows that it takes 17.8% of the annualized wages to buy a median price home.

Washington County’s index dropped to 105 from 111. That’s based on an 18% increase in the median home price and a 2% increase in the annualized wage growth. The report says it takes 25.8% of wages to buy a median-priced home.

On the surface, the Q2 indices contradict the Northeast Tennessee Association of Realtors (NETAR) Trends Report which shows resales of single-family homes in Sullivan County have outpaced Washington County. Actually, both the Trends Report and ATTOM’s HPI are correct. They just focus on different data sets but compliment each other by illustrating different aspects of the housing market.  Sullivan County and Kingsport have outpaced Washington County and Johnson City resales. And there’s anecdotal evidence part of that was – and may still be – some residents leaving Washington County and Johnson City for more affordable housing in Kingsport and Sullivan County.

Compare what ATTOM’s wage and median price data says for an affordability example. The median home prices cited are $109,000 in Sullivan County and $139,900 in Washington County. The percentage of wages to buy a median-priced home is 8.4% lower in Sullivan than in Washington.

Another factor is the abundance of rental properties that are the result of a flurry of major apartment complex coming online last year and more on the way. That has increased the competition among the older complexes and the new complexes for tenants – especially in Kingsport where some believe the apartment complex market has been overbuilt.

Nationwide the Q2 home affordability index of 95 was the lowest level since Q3 2008.

“Slowing home price appreciation in the second quarter was not enough to counteract an 11 percent increase in mortgage rates compared to a year ago, resulting in the worst home affordability we’ve seen in nearly 10 years,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile home price appreciation continued to outpace wage growth, speeding up the affordability treadmill for prospective homebuyers even without the rise in mortgage rates.”

Locally availability has been as much of an issue as affordability as the market contends with some of the lowest inventory levels that are the tightest many real estate professionals can remember. In May the region covered by the Trends Report had a little over four months supply of home on the market and in the primary city markets inventory was tighter.

Sullivan and Washington’s homes were most affordable in Q1 2013. That’s  when the median home price was $80,700, and the average weekly wage was $946 in Sullivan and $103,950 in Washington County with an average weekly wage of $700.

They were least affordable in Sullivan County during Q2 2006 when the median price was $95,000, and the average weekly wage was $736. Washington County’s  affordable low mark was Q3 2007 when the median home price was $129,000, and the average weekly wage was $597.